Thomas P.M. Barnett :: Weblog

OP-ED: “Globalizing Good Government: The more open countries are to trade, the better they are run,” by Richard W. Fisher and W. Michael Cox, New York Times, 10 April 2006, p. A25.

ARTICLE: “When Security, Foreign Investment Collide: Business Groups Fret Over Bill That Would Require Greater Scrutiny of Deals From Abroad,” by Neil King Jr., Wall Street Journal, 10 April 2006, p. A4.

ARTICLE: “Marriott CEO blasts Congress over immigrant bill: Businesses that hire illegal workers would be ‘felons,” by Barbara De Lollis, USA Today, 12 April 2006, p. 4B.

ARTICLE: “China Requires Legal Operating Software in PCs,” by Terence Poon, Wall Street Journal, 11 April 2006, p. B3.

ARTICLE: “Chinese Turn To Civic Power As a New Tool,” by Howard W. French, New York Times, 11 April 2006, p. A1.

ARTICLE: “Bush calls on Hu to outline position on trade,” by Christopher Swann and Edward Alden, Financial Times, 11 April 2006, p. 1.

OP-ED: “America must be pragmatic with Putin: If the US were to turn its back on Russia, we would not advance the growth of liberal democracy in Russia,” by Joseph Nye, Financial Times, 11 April 2006, p. 15.

ARTICLE: “The white peril: China is starting to worry about the size and impact of the foreign investment it has so assiduously courted,” The Economist, 1 April 2006, p. 16.

Great article by Fisher and Cox in the Times. A lot of friends and readers sent it to me, and I got the chance to discuss it over breakfast with Steve DeAngelis, my buddy Asif Shaikh of International Resources Group (very respected USAID and energy consultancy/contractor), and John White, former DEPSECDEF under Clinton and now at the Kennedy School (who turns out to have a big brain to match his stellar reputation; I told him I always admired Clinton’s DEPSECs, the strongest such crew I believe that has ever been).

Basic gist: It uses the Foreign Policy measurements of globalization connectivity to compare and contrast the least and most globalized societies and… no surprise, the most globalized have the best anti-corruption policies, the most open capital markets, the best regulatory quality, the most favorable corporate taxes, the most limited government scope, the lowest individual tax rates, the most innovative policies, the most political stability, the most flexible labor markets, the best rule of law and the lowest average inflation.

My only problem with the FP index, is that it measures strictly degree on a size/per cap basis and therefore captures no dynamics. Emerging New Core pillars Brazil, Russia, India and China are all declared “least globalized” while very disconnected Saudi Arabia is only “less connected.” So no sense of movement and a poor capture of broadband connectivity, in my mind

Still, it’s a very useful tool and the basic points are both undeniable and very clear: when you globalize your economy you get a better government, and better governments do better at globalizing--a wonderfully virtuous circle.

The King Kong of the index is, of course, Singapore, but that shows only what a huge throughput Singapore is for FDI (as a percent of total GDP, both the inward and outward flows are astronomical, like over 70% last time I checked). And where does a huge amount of this money go? To “least globalized” China. Singapore, as I wrote in PNM, is the Kevin Bacon of worldwide FDI flows, meaning it gets you anywhere in the world in the fewest steps--money-wise.

But again, the key point is clear: if we want better governments in the world, we push globalization, which is both the great challenge and the great cure of bad or weak governments the world over.

Speaking of direction, though, isn’t it scary to see the U.S. moving in the direction of making it harder to invest in our country (Senator Shelby’s proposed rewrite of CIFUS), plus that scary House bill that threatens to make a felon of every illegal immigrant (Boy, that worked well in the War on Drugs, didn’t it? I mean, if you’re in the prison industry and I do believe we are the King Kong of that global category…).

Meanwhile, China seems to be moving in the right direction, albeit from a standard way below our own. Just like everyone has been predicting, China gets more wealth and moves in the direction of wanting to protect that wealth through better laws, and a more active citizenry pushing its demands upon a relatively unresponsive government (which still seems to think public hangings obviate the need for a well-functioning SEC, for example).

Still, I have to admire the restraint of the Bush administration, led (I hope as much as possible) by the brilliance that truly is Bob Zoellick, current DEPSECSTATE. I mean, Bush’s calibrated prodding on China stands in stark contrast to the buffoonery of the senators Graham and Schumer on their “Kow-Tow 2006 Tour.”

Similar pragmatism and patience is also called for with Russia, as my old PhD adviser Joe Nye points out in his most excellent FT op-ed. Here we have another hotheaded senator (unfortunately, one who dreams of being president into his 80s), John McCain, who wants Western leaders to boycott the G-8 Summit hosted by Putin. Gratefully, the Bush White House brushes off the proposal as nonsense, and McCain just looks amazingly unpresidential in the process. I mean, the guy is so famous for his temper, how can we expect any strategic guidance from him?

Here’s some from Joe:

What will Russia’s future look like? One former political leader suggested that Russian politics is like a pendulum. It had swung too far in the direction of chaos under Boris Yeltsin and was now swinging too far in the direction of order under Mr. Putin, but would eventually reach equilibrium … Dimitri Trenin, deputy director of the Carnegie Endowment’s Moscow Center, argued that “although not democratic, Russia is largely free. Property rights are more deeply anchored than they were five years ago. Russia’s future now depends heavily on how fast a middle class--a self-identified group with personal stakes in having a law-based government accountable to the taxpayers--can be created.”

Care to trash that historical pathway in your proposed administration, Senator McCain? Or are you just playing with your wedge when you should be trying your putter?

You wanna know why there are no famous Western experts on Russia any more? Because we don’t need them. The Russians explain themselves better than anyone else can. To me, it signals that key directional vector, and if you want to be a strategic thinker, you look for vectors, not degree. Steer by the compass, not the wake.

Meanwhile, while America obsesses over furrrriners running our ports, it’s only begun to dawn on some Chinese that the world is starting to own them much more than they are reputedly running the global economy. And yet, what choice does China have with 900 million poor living in the interior?

Gotta wonder if McCain would boycott the G-9 summit in Beijing? Would that move them in the better direction, do ya think?

I say, let’s stand up for what we believe in most and what made this country the great democracy it is today: markets, markets, markets.

Good globalizers, good growth, better governments. Skip the boycotts senator. Take an international economics class instead.